Rip-Off Alert: Scammers snare precious education dollars

LAS VEGAS (KSNV MyNews3.com) — In this Rip-Off Alert from San Francisco, some scam artists have figured out a way to steal money that should be in the pockets of students who need it.

U.S. Postal Inspector William Zemblidge says con artists figured out a way to defraud the college financial aid system.

“They were using and stealing identities or wrongfully using identities of others to make applications for financial aid at various universities,” Zemblidge said.

“By doing that, you’re receiving financial aid or grants that are given to you, and ultimately the monies would come into a location or an address that was controlled by the suspects or the people involved in the ring.”

The problem is growing nationally. In 2013, more than 12 million U.S. college students applied for federal aid for the school year starting last fall.

More than 126,000 applications were flagged by schools and the government as potential scammers, according to The Wall Street Journal.

“People who really need these funds, and who want to go to school, and who want to reach their goal, whatever it may be — there is a pool of money that’s out there,” Zemblidge said, “and these crooks are stealing that, and they’re ultimately leeching from the system.”

Another problem is people who apply for this money with no intention of attending school. Between 2007 and 2010, the amount of Pell Grant money given out improperly jumped from $400 million to around $1 billion.

Officials say Pell Grants are an easy target for scammers because the aid does not get repaid like a loan and requires no credit check. Once the money is paid out, the student can basically do with it what he pleases, such as leave school and take the money with him.

“If you do this, if you decide the misuse student aid funds, if you decide to misuse these funds by misusing the U.S. Mail, you are committing mail fraud,” Zemblidge said, “and we will investigate you vigorously, and you will be prosecuted to the fullest extent of the law.”

The Scholarship Fraud Prevention Act created a fraud awareness partnership between the U.S. Department of Education and the Federal Trade Commission.

For more information about scholarship scams or to report a scam, call (877) 382-4357.